A V Rajwade: Will Rajan get a second term?

A V Rajwade: Will Rajan get a second term?: The RBI governor set inflation targeting as the single-point agenda. Is there a conflict between the single-point agenda and the RBI's role as banking supervisor?


Dr Rajan’s tenure

This refers to A V Rajwade’s article “Will Rajang get a second term?” (Business Standard, May 19).Yes. Dr Raghuram Rajan is likely to be appointed for a five year term from September 2016. So far, on all occasions with the exception of two or three out of 23, GOI has shown a mature approach while appointing RBI Governor. My personal view is that we can safely discount Dr Subramanian Swamy’s enmity to Dr Rajan and open comments mostly for the consumption of media. His earlier suggestion to replace Dr Rajan by appointing Vaidyanathan and the present campaign after Swamy’s own entry into Rajya Sabha gives an impression that the learned economist-turned-politician doesn’t differentiate between appointment of state governors and RBI Governor.
Dr Rajan should have been appointed for a full 5 year term in 2013. This is what happens when governments take short-term views on serious and crucial issues. I had observed in an article written on the subject during August 2013 (The Global ANALYST, September 2013) as under:

“The only negative in the whole affair is, as on several occasions in the past, once again GOI has opted for a short-term appointment. This time it should have been for a five-year term in the first instance itself. We are not privy to the information as to whether the decision to appoint Rajan for three years was because of a casual ‘cut & paste’ from previous appointment orders or because GOI thought, if friction between RBI and GOI persists, changing RBI Governor more often is a soft option. As someone in the media already observed, the flip side is, if things do not go well, Dr Rajan could choose an assignment anywhere, a choice, many in top positions in India do not have.
Ideally, RBI Governor should have an average tenure of five to 10 years. If such a norm was followed, Dr Rajan would have been perhaps the 15th Governor of RBI. Now he is 23rd! All Governors who have stayed in office beyond 4 years have contributed to the strength of the central bank.”
M G Warrier,  Thiruvananthapuram


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